Should FAs Allow Clients’ Political Opinions to Influence Their Investment Decisions?

Should FAs Allow Client's Political Opinions to Influence their Investment Decisions?

Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.

For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.

Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.

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Current Events Are White Noise

Current Events Are White Noise - Don Connelly video post

Seemingly each day, the media hysteria heightens. You’d think nobody would want a steady diet of bad news, but you and I know that it’s not going to stop. Why? Because bad news sells.

Do you ever wonder why bad news sells? Do you ever wonder why we focus on what’s wrong in the world? We do that because we’re concerned about anything that threatens our sense of wellbeing.

Watch this video or read the transcript below to learn why we do that and what you and your clients should focus on.

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How to Regain the Trust of a Client After a Disagreement

How to Regain the Trust of a Client After a Disagreement

Can you think of any relationship that has never experienced conflict—where two people with the best of intentions fail to see eye to eye on an issue? Such is the nature of relationships, even where there is a track record of trust. You expect it in a marriage and even among colleagues—so why not between a financial advisor and their client?

It happens more than you might think. Financial advisors are wired to be analytical, while clients are often driven by emotion, which sets the stage for many “reality vs. perception” standoffs.

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Advisors Must be Able to Lead Clients Through Emotional Struggles

Advisors Must be Able to Lead Clients Through Emotional Struggles

Last year during the COVID market crash was a golden opportunity for financial advisors to demonstrate their true worth to anxious clients as a coach and a counselor. Your greatest value to your clients is being there for them during times of financial stress and anxiety. Good financial advisors are prepared to handle the fallout of a severe market decline, holding their clients’ hands, and coaching them through their anxieties.

However, few advisors are as prepared when it comes to facing their clients’ personal emotional issues that can cause even greater stress and anxiety, leading to poor financial decision-making. Life events, such as the death of a spouse or family member, divorce or family rifts, a medical crisis, a job loss, or other major life changes are common. Yet many advisors aren’t prepared to help their clients face the issue, or worse, are unable to recognize when a client is struggling emotionally.

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Helping Clients Understand the Normalcy of Market Corrections

Helping Clients Understand the Normalcy of Market Corrections

As a financial advisor, you work closely with your clients to craft investment strategies tailored to their objectives and risk profiles, and then monitor them over time. That very well may be the easy part of your client relationship. The more significant challenge you have as an advisor is to make sure your clients stay the course with their strategy even in the midst of a steep market correction.

One of the primary responsibilities of a financial advisor is to convey to their clients that the only concern they should have about a market downturn is not how deep it falls or how long it lasts, but how they react to it. After all, no one can predict when a market correction will occur, but we know that it will. After the longest bull market in history, clients tend to forget that stock prices can go down as well as up, and that market corrections are quite normal. That confers upon advisors the responsibility of educating their clients on the inevitability of market corrections and how they should react to them.

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How to Build Your Story-Benefit Matrix

How to Build Your Story-Benefit Matrix

Last week I blogged about a useful sales tool called a story-benefit matrix, and why you should develop one for your practice. Just going through the process is beneficial: It forces you to think through a number of different ways your prospective client will benefit by working with you – and gives you an opportunity to help tell an illustrative story that will cement that case.

It’s basic “soft-skills” at work.

But it’s helpful to understand how to build one yourself, so let me help you with that.

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8 Stories to Help You Build Trust and Open Accounts

8 Stories to Help You Build Trust and Open Accounts

As you might know already, I’m a big believer in telling a story.

As I write this, it’s presidential campaign season. The candidates are all about telling their stories. They want to get their preferred narratives out there, in front of voters. Successful candidates are very well rehearsed on these stories. They constantly make references to these stories, in the effort to brand themselves, differentiate themselves from other candidates, and inoculate themselves against attacks from competing candidates and their staffs.

Why?

Because it works!

It works in financial services, too.

In fact, it works so well that I don’t want you to have a single story defining you. I want you to have at least eight! And I want you to know them cold.

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